ESPN, the Disney-controlled sports broadcaster, reported on Friday said that a deal was “imminent”.

A sticking point is said to be an agreement on who should become chief executive of the combined entity.

Antitrust regulators from both the Department of Justice and the Federal Trade Commission may also intervene to halt the deal.

Any attempted merger between the daily fantasy sports industry’s top two players would face regulatory challenges under the Hart Scott Rodino Antitrust Improvements Act of 1976.

Nigel Eccles, chief executive of Edinburgh and New York based FanDuel, and his counterpart Jason Robins at Boston-based DraftKings are fierce rivals, but have spent the last year sharing a battle with state legislators over the legality of fantasy sports games.

Mr Schneiderman kicked off the court battles when he issued a “cease and desist” order on the companies last autumn.

Since then they have managed to win over most states, including New York, in order to fully re-enter the market.

However, questions were also asked last week about their financial circumstances, fuelled by reports saying they were asking to pay the settlement in instalments. They have also cut back on television advertising.

FanDuel is one of two Scottish companies valued at $1 billion (the other is Skyscanner) but it is yet to report a profit.

In an interview with Daily Business in June Northern Irishman Mr Eccles said this was largely because of the firm’s decision to invest in the company. In August this year it launched its games in the UK, focused on the English Premier League.

The group has received $339.6m in funding rounds over the last 18 months and continues to hold discussions with other investors. Recent accounts show it has net assets of $244,034.

Daily Business learned at the turn of this month that Mr Eccles and his wife Lesley (right), a regular on the Scottish speaking circuit, would be relocating to the US where it does most of its business.

The company is investing heavily in a new Scottish headquarters in Edinburgh’s Quartermile.

FanDuel and DraftKings have played down merger speculation but when asked about it in an interview last month, Mr Robins said: “I would never say never to something like that.”

He said there were “a lot of reasons” why a combination could be beneficial, but he also stressed any deal would have to be done in the right way to create long-term shareholder value.

“These conversations sometimes stop and start and there is always a rhythm to it. When the time is right maybe it will happen – I don’t know.”

Regarding the latest reports, a DraftKings spokesperson said: “As we have stated previously, a potential combination would be interesting to consider.

“However, as a matter of policy, we don’t comment on rumours or speculation, and there can be no assurances at this time that any discussion about a combination would result in an agreement or merger.”